Best practices around the XPM WIP washup process
Invoices that flow from Xero into Xero Practice Manager (XPM) against a job need to be matched to the time and ‘washed-up’ to crystallise either a profit or a write off on the job.
There are many ways that this can be done but there are main two approaches:
1 - Create a Final or Progress invoice (can be $0) on the job from inside XPM to deal with any write offs/write ups on specific time entries.
If deciding on this route, you should be very clear about the benefits you are getting from doing it this way. Is the information being surfaced affecting decisions you are making in the business that actually impact profits or team performance?
In addition to being administratively complex and time consuming, if you are choosing to make decisions at a time entry level for write-offs/write-ons, who is making those decisions at the micro level?
If it’s the Admin Team do they really know enough about the nuances of the job to make those decisions? If it’s the Client Manager or even a more senior team member is this really a good use of their time?
So what is the alternative that Xero & Ignition recommend?
2. Simply use the ‘Remove from Invoice List’ button once all of the invoicing and all of the time is on the job.
Of course, longer term your best team performers will on average rise to the top of the ‘performance’ ladder and you'll also be able to identify team members needing more support.
Here’s Xero's support article that runs through the remove from invoice list WIP wash-up method at both an individual job level and in bulk.
If you do need to raise a final invoice before doing the above, this is best done from Ignition as it will give you the opportunity to collect on that final invoice using the payment method the client has provided. You might also want to give them the option of paying that final invoice using the ‘Review and Pay’ functionality inside Ignition.
Ensure that the CLI- or PROP- reference in the Client Order No. field of the XPM job is in the reference field of the Xero invoice. Then you just need to wait overnight until Xero and XPM sync to bring the invoice over to the job.
It’s a good idea to create a new Job State of ‘Waiting for Ignition Invoice’ to move the job into whilst you are waiting for the invoice to be imported onto the job from Xero overnight. This can then be used to stop team members from raising a second invoice from inside XPM.
A final tip around doing things this way is to go to Business → Settings → Practice Settings → Job → Invoiced State and selected ‘Completed’. This will then automatically mark as Complete any jobs that you either create a Final invoice for in XPM or use ‘Remove from Invoice List’ to do the WIP washup in bulk.
If you use ‘Remove from Invoice List at a Job level you will still need to manually mark the job as Complete.’
See here for XPM's written steps for writing on/off bundled items.
Below is how we see things working when you have Ignition Invoices being created and imported into Xero Practice Manager.
Select your "Billing job" as you create your proposal in Ignition
When you create your proposal in Ignition, you have the ability to choose a specific billing job either at a client level or proposal level.
It's important that you understand how invoices allocate between the Ignition/Xero invoices and XPM jobs.
Check your connection settings
You need to ensure that your connection from XPM to Xero is set up correctly in XPM so the invoices flow back through.
Go to Business → Settings → Xero and ensure that "Automatically import invoices from Xero" is ticked.
How often should you do A WIP Washup?
Ideally your work should be delivered through Annual Service Agreements where you would do a WIP washup every year. It is better to get visibility over job performance whilst jobs are still open so that you still have time to do something about a potential write off before it occurs.
If you are not using an Annual Job structure we recommend washing up your WIP around the milestones of your core service delivery.
For example, if you primarily deliver monthly services using monthly jobs, wash up your WIP monthly. If you do quarterly services using quarterly jobs, wash it up quarterly.
Using XPM Job Categories to understand and manage your WIP
It is a good idea to use Job Categories to split out contract jobs (where you may be trying to accumulate sufficient negative WIP to cover the year-end work) from billable jobs, where the WIP actually indicates a store of value. You can then run WIP filters by Category to surface each set of jobs cleanly.
As touched on above, XPM Job Categories help meaningfully categorise different types of engagements in XPM to help you better understand and efficiently manage your WIP.
To ensure you are maximising your use of Job Categories we recommend you follow the best practice set-up steps in this article.
Using Job Categories will enable your practice to easily filter and segment WIP Reports in XPM (Business → Work in Progress → Filters) so that contracted WIP (which will be a net figure - time charged less interim invoicing to date) can be easily separated from billable WIP.
This is absolutely essential for segmenting WIP for monthly billing purposes, providing you are still billing WIP.